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Sunday, August 02, 2009

Investors Buying Low End Foreclosures

by Calculated Risk on 8/02/2009 08:32:00 PM

From Carolyn Said at the San Francisco Chronicle: Oakland group buying Contra Costa foreclosures (ht Walt, John)

Oakland's McKinley Partners is betting that low-end foreclosed homes in eastern Contra Costa County will double in value in five years.

The real estate development company has formed a $6 million fund to buy bank-owned homes in Antioch, Pittsburg and Bay Point.

It aims to spend about $100,000 per home, including rehab, and rent them out for $1,200 to $1,500 a month. Then it hopes to sell them for $200,000 each in five years.

McKinley is emblematic of a major force currently propelling the real estate market: investors and speculators snapping up foreclosed homes. Along with first-time buyers, they are a primary source of increased sales volume.
I know investor groups doing the same thing, and they pay cash too. As far as these numbers - good luck. The numbers only make sense at the low end, and rents are falling quickly. It is very unlikely the price will double in five years - or even ten years. As the price increases, investors will be selling properties, keeping prices down.

Think of investor owned properties as being in storage, and being removed from storage and sold as the price increases (although this is different than the investors during the bubble because of the positive cash flow).

There are headaches managing low end rental properties too. These will be high maintenance, and finding tenants with decent credit will be difficult.

A few of McKinley's buying guidelines are interesting:
-- It avoids newer homes in cookie-cutter subdivisions. "If they're all around the same vintage of mortgage, then they can all go upside down at the same time," [Gregor Watson, one of four managing partners] said. ...

-- It avoids higher-priced homes. "As the price point gets higher, rents don't cover (costs)," Watson said. ...

-- It's finding that inventory is limited because lenders are sitting on foreclosures. "Banks own 530 homes in this ZIP code (Pittsburg's 94565) but there are only 15 on the market," said [Paul Staley, president of Staley and MacArthur Real Estate Services] "It creates a hyper-competitive situation."
And how about that comment on ZIP code 94565? Only 15 houses on the market, but 530 REOs according to Staley.

July Economic Summary in Graphs

by Calculated Risk on 8/02/2009 04:18:00 PM

Here is a collection of real estate and economic graphs for data released in July ...

Note: Click on graphs for larger image in new window. For more info, click on link below graph to original post.

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New Home Sales Monthly Not Seasonally Adjusted New Home Sales in June (NSA)

The first graph shows monthly new home sales (NSA - Not Seasonally Adjusted).

Note the Red columns for 2009. This is the 2nd lowest sales for June since the Census Bureau started tracking sales in 1963.

In June 2009, 36 thousand new homes were sold (NSA); the record low was 34 thousand in June 1982; the record high for June was 115 thousand in 2005.

From: New Home Sales increase in June, Highest since November 2008

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New Home Sales and Recessions New Home Sales in June

This graph shows shows New Home Sales vs. recessions for the last 45 years.

"Sales of new one-family houses in June 2009 were at a seasonally adjusted annual rate of 384,000 ...

This is 11.0 percent (±13.2%)* above the revised May rate of 346,000, but is 21.3 percent (±11.4%) below the June 2008 estimate of 488,000."


From: New Home Sales increase in June, Highest since November 2008

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New Home Months of Supply and Recessions New Home Months of Supply in June

There were 8.8 months of supply in June - significantly below the all time record of 12.4 months of supply set in January.

"The seasonally adjusted estimate of new houses for sale at the end of June was 281,000. This represents a supply of 8.8 months at the current sales rate."

From: New Home Sales increase in June, Highest since November 2008

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Existing Home Sales Existing Home Sales in June

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in June 2009 (4.89 million SAAR) were 3.6% higher than last month, and were 0.2% lower than June 2008 (4.90 million SAAR).

From: Existing Home Sales increase in June

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Existing Home Inventory Existing Home Inventory June

This graph shows nationwide inventory for existing homes. According to the NAR, inventory decreased to 3.82 million in June. The all time record was 4.57 million homes for sale in July 2008. This is not seasonally adjusted.

Typically inventory increases in June, and peaks in July or August. This decrease in inventory was a little unusual.

Also, many REOs (bank owned properties) are included in the inventory because they are listed - but not all. Recently there have been stories about a substantial number of unlisted REOs and other shadow inventory - so this inventory number is probably low.

From: Existing Home Sales increase in June

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YoY Change Existing Home Inventory Existing Home Inventory June, Year-over-Year Change

This graph shows the year-over-year change in existing home inventory.

If the trend of declining year-over-year inventory levels continues in 2009 that will be a positive for the housing market. Prices will probably continue to fall until the months of supply reaches more normal levels (closer to 6 months compared to the current 9.4 months), and that will take some time. Plus remember the shadow inventory!

From: More on Existing Home Inventory

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Case-Shiller House Prices Indices Case Shiller House Prices for May

This graph shows the nominal Composite 10 and Composite 20 indices (the Composite 20 was started in January 2000).

NOTE: This is not seasonally adjusted.

The Composite 10 index is off 33.3% from the peak, and up slightly in May.

The Composite 20 index is off 32.3% from the peak, and up slightly in May.

From: Case-Shiller House Prices for May

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Residential NAHB Housing Market Index NAHB Builder Confidence Index in July

This graph shows the builder confidence index from the National Association of Home Builders (NAHB).

The housing market index (HMI) increased to 17 in July from 15 in June. The record low was 8 set in January.

From: NAHB: Builder Confidence Increases Slightly In July

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AIA Architecture Billing Index Architecture Billings Index for June

"It appears as though we may have not yet reached the bottom of this construction downturn," AIA Chief Economist Kermit Baker said.

The Architecture Billings Index fell more than 5 points last month to a reading of 37.7, after a slight increase in the prior month, according to the American Institute of Architects...."

From: AIA: Architecture Billings Index Declines in June

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Total Housing Starts and Single Family Housing Starts Housing Starts in June

Total housing starts were at 582 thousand (SAAR) in June, up sharply over the last two months from the all time record low in April of 479 thousand (the lowest level since the Census Bureau began tracking housing starts in 1959).

Single-family starts were at 470 thousand (SAAR) in June; 31 percent above the record low in January and February (357 thousand).

From: Housing Starts in June

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Construction Spending Construction Spending in May

This graph shows private residential and nonresidential construction spending since 1993. Note: nominal dollars, not inflation adjusted.

Residential construction spending fell further in May, and nonresidential spending was up a little (because of private spending on power production), but will probably decline sharply over the next two years.

From: Constructon Spending Declines in May

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Employment Measures and Recessions June Employment Report

This graph shows the unemployment rate and the year over year change in employment vs. recessions.

Nonfarm payrolls decreased by 467,000 in June. The economy has lost almost 5.7 million jobs over the last year, and 6.46 million jobs during the 18 consecutive months of job losses.

The unemployment rate rose to 9.5 percent; the highest level since 1983.

Year over year employment is strongly negative.

From: Employment Report: 467K Jobs Lost, 9.5% Unemployment Rate

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Percent Job Losses During Recessions June Employment Comparing Recessions

The second graph shows the job losses from the start of the employment recession, in percentage terms (as opposed to the number of jobs lost).

For the current recession, employment peaked in December 2007, and this recession was a slow starter (in terms of job losses and declines in GDP).

However job losses have really picked up over the last 9 months (4.4 million jobs lost, red line cliff diving on the graph), and the current recession is now the 2nd worst recession since WWII in percentage terms - and also in terms of the unemployment rate (only early '80s recession was worse).

From: Employment Report: 467K Jobs Lost, 9.5% Unemployment Rate

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Year-over-year change in Retail Sales June Retail Sales

This graph shows the year-over-year change in nominal and real retail sales since 1993.

The Census Bureau reported that nominal retail sales decreased 10.3% year-over-year (retail and food services decreased 9.6%), and real retail sales declined by 9.7% on a YoY basis.

From: Retail Sales in June

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LA Area Port Traffic LA Port Traffic in June

This graph shows the loaded inbound and outbound traffic at the port of Los Angeles in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container). Although containers tell us nothing about value, container traffic does give us an idea of the volume of goods being exported and imported.

Inbound traffic was 22.2% below June 2008.

Outbound traffic was 19.2% below May 2008.

There had been some recovery in U.S. exports over the last few months (the year-over-year comparison was off 30% from December through February). And this showed up in the in the May trade report, but the port data suggests exports were a little weaker in June.

From: LA Area Port Traffic in June

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U.S. Trade Deficit U.S. Imports and Exports Through May

This graph shows the monthly U.S. exports and imports in dollars through May 2009.

Imports declined again in May, but U.S. exports were up slightly. On a year-over-year basis, exports are off 21% and imports are off 31%.

From: Trade Deficit Declined in May

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Capacity Utilization June Capacity Utilization

This graph shows Capacity Utilization. This series is at another record low (the series starts in 1967).

"Industrial production decreased 0.4 percent in June after having fallen 1.2 percent in May. ... The rate of capacity utilization for total industry declined in June to 68.0 percent, a level 12.9 percentage points below its average for 1972-2008. Prior to the current recession, the low over the history of this series, which begins in 1967, was 70.9 percent in December 1982."

From: Industrial Production Declines, Capacity Utilization at Record Low in June

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Vehicle Miles YoY Vehicle Miles driven in May

This graph shows the comparison of month to the same month in the previous year as reported by the DOT.

"Travel on all roads and streets changed by +0.1% (0.2 billion vehicle miles) for May 2009 as compared with May 2008."

Year-over-year miles driven started to decline in December 2007, and really fell off a cliff in March 2008. This makes for an easier comparison for May 2009.
From: DOT: Vehicle Miles Flat YoY

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Weekly Unemployment ClaimsUnemployment Claims

The four-week average of weekly unemployment claims decreased this week by 8,250, and is now 99,750 below the peak of 16 weeks ago. It appears that initial weekly claims have peaked for this cycle.

The level of initial claims has fallen fairly quickly - but is still very high (over 580K), indicating significant weakness in the job market.

From: Weekly Unemployment Claims

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Restaurant Performance Index Restaurant Performance Index for June

"The Association’s Restaurant Performance Index (RPI) – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 97.8 in June, down 0.5 percent from May and its 20th consecutive month below 100.
...
Restaurant operators also reported negative customer traffic levels in June, marking the 22nd consecutive month of traffic declines."

From: Restaurants: 22nd Consecutive Month of Traffic Declines in June

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Philly Fed State Conincident Map Philly Fed State Conincident Indicators for June

Here is a map of the three month change in the Philly Fed state coincident indicators. Forty seven states are showing declining three month activity.

This is what a widespread recession looks like based on the Philly Fed states indexes.

On a one month basis, activity decreased in 46 states in June, and was unchanged in 1 state.

From: Philly Fed State Coincident Indicators: Widespread Recession in June

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Vehicle Sales Light vehicle sales in June

This graph shows the historical light vehicle sales (seasonally adjusted annual rate) through June (red, light vehicle sales of 9.69 million SAAR from AutoData Corp).

June was about average for the year so far on seasonally adjusted basis, and sales are still on pace to be the worst since 1967.

From: Graphs: Auto Sales in June

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non-business bankruptcy filings Personal Bankruptcy Filings Q2 2009

This graph shows the non-business bankruptcy filings by quarter.

Note: Quarterly data from Administrative Office of the U.S. Courts, Q1 and Q2 2009 based on monthly data from American Bankruptcy Institute.

The quarterly rate is close to the levels prior to when the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) took effect.

From: Personal Bankruptcy Filings increase 40% in June (YoY)

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Homeownership Rate Homeownership Rate Q2 2009

The homeownership rate increased slightly to 67.4% and is now at the levels of Q2 2000.

The homeownership rate increased in the '90s and early '00s because of changes in demographics and "innovations" in mortgage lending. The increase due to demographics (older population) will probably stick, so I expect the rate to decline to the 66% to 67% range - and not all the way back to 64% to 65%.

From: Q2: Homeowner Vacancy Rate Declines, Rental Vacancy Rate at Record High

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Homeowner Vacancy Rate Homeowner Vacancy Rate Q2 2009

The homeowner vacancy rate was 2.5% in Q2 2009. This is the lowest vacancy rate since mid-2006, but still very high. A normal rate for recent years appears to be about 1.7%.

This leaves the homeowner vacancy rate about 0.8% above normal, and with approximately 75 million homeowner occupied homes; this gives about 600 thousand excess vacant homes.

From: Q2: Homeowner Vacancy Rate Declines, Rental Vacancy Rate at Record High

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Rental Vacancy Rate Rental Vacancy Rate Q2 2009

The rental vacancy rate increased to a record 10.6% in Q2 2009.

Even there has been a move from homeownership to renting, the surge in available units has been amazing - because of investors buying REOs for cash flow, condo "reconversions", builders changing the intent of new construction (started as condos but became rentals), flippers becoming landlords, or homeowners renting their previous homes instead of selling. See: The Surge in Rental Units

From: Q2: Homeowner Vacancy Rate Declines, Rental Vacancy Rate at Record High
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Shadow Inventory

by Calculated Risk on 8/02/2009 01:51:00 PM

First, lifted from the comments on Corus: "Too toxic to fail." by Rob Dawg

On shadow inventory from Reuters: "Shadow" inventory lurks over U.S. housing recovery (ht Denny)

[A] massive supply of unsold homes is waiting in the wings and could easily swamp the recovery before it can gather speed.

"The number of homes listed officially on the market, while still at historically high levels, might be only the tip of the iceberg," said Stan Humphries, chief economist at real estate website Zillow.com in Seattle, Washington.

According to Zillow's latest Homeowner Confidence Survey, 12 percent of homeowners said they would be "very likely" to put their home on the market in the next 12 months if they saw signs of a real estate market turnaround, 8 percent said "likely," while 12 percent said "somewhat likely."
There are several categories of shadow inventory:

  • REOs. There are bank owned properties that have not been put on the market yet. Several sources have told me the number is growing - no one knows why except possibly for accounting reasons (the banks might have to take an addition write down when they sell the property).

  • Foreclosures in process. The delinquency rate has continued to rise, and this will probably lead to many more foreclosures later this year. The number of foreclosures depends somewhat on the success of the modification programs. Last year many delinquent homeowners listed their homes as "short sales" - so those homes were not shadow inventory, however fewer delinquent homeowners are listing their homes now as they try to work with their lenders on a modification. Some percentage of these homes are shadow inventory.

  • New high rise condos. These properties are not included in the new home inventory report from the Census Bureau, and do not show up anywhere unless they are listed.

  • Homeowners waiting for a better market. This was the group mentioned in the Reuters story (the article also mentioned foreclosures). These are homeowners waiting for better market conditions to sell.

    Inventory is usually the best metric to follow for the housing market - and according to recent releases inventory is declining for both new and existing homes - however shadow inventory clouds this picture.

  • Quote about Corus: "No franchise value to the bank at all"

    by Calculated Risk on 8/02/2009 10:49:00 AM

    From Becky Yerak at the Chicago Tribune: Corus Bankshares Inc. on cusp of crisis (ht Walt)

    [A] major hurdle for the [FDIC] is that $7.07 billion-asset Corus, with only 14 offices in the Chicago area, has operated more like a real estate investment company than a traditional bank.

    As a result, bankers like John Kanas, chief executive of BankUnited, believe the FDIC would have a tough time finding banks eager to swallow Corus whole.

    "There's no franchise value to the bank at all," he said, citing its limited branch network, a reliance on high-cost deposits and an unsustainable business model.

    "It was a bank created around the asset side of the balance sheet: 'Let's go make a lot of loans and figure out a way to fund them later,' instead of a bank that had a valuable franchise of deposit collection and was looking for a place to put those deposits," Kanas said.
    The article discusses why it is has been difficult to find a buyer for Corus. There is tremendous uncertainty on the asset side (see this article today in the Las Vegas Sun on the Streamline Tower), and the new proposed rules for private-equity firms has made bidding for assets of failed banks less attractive.

    This is why the FDIC is discussing splitting failed banks into two pieces, and then selling the deposits and branches to another bank, and many of the assets to PE firms (or create a new RTC).

    There is much more in the article ...

    Geithner: Administration Looking at Further Extensions for Unemployment Benefits

    by Calculated Risk on 8/02/2009 08:54:00 AM

    Note: According to a recent report, workers are starting to exhaust the extended unemployment benefits. The National Employment Law Project estimates 0.5 million workers will have exhausted their extended benefits by the end of September, and close to 1.5 million by the end of 2009. Unless the unemployment rate starts to decline, the numbers will continue to grow rapidly in 2010.

    Treasury Secretary Geithner was on This Week with George Stephanopoulos today and touched on unemployment benefits. A few excerpts from the transcript:

    STEPHANOPOULOS: What are the chances we're going to see a second dip later this year?

    GEITHNER: That's something we're very focused on, again. We need recovery to be built on private demand, private spending. Businesses taking a chance again on the American economy. Putting investments to work. Starting to rebuild their employment base. That's the ultimate test for recovery. And a very important thing for us is to make sure we're sticking with this until we're very confident we have a strong private sector led recovery in place.

    STEPHANOPOULOS: And what are you looking at that would give you some cause for concern that we could slip back.

    GEITHNER: Well, I don't think you can see that risk now, again. In the stimulus program and what we've done in the financial sector are designed to have sustained impact. Again, the damage we had done to our economy was so great that it was just going to take a long sustained effort.

    STEPHANOPOULOS: And that means unemployment will remain high for the rest of this year. At the same time we're seeing reports that up to 1 and a half million people could be losing their unemployment benefits by the end of this year. Does that mean that the Administration is going to have to look at extending unemployment benefits again?

    GEITHNER: I think that is something that the Administration and Congress are going to look very carefully at as we get closer to the end of this year . And that's going to be one important thing to look at.

    STEPHANOPOULOS: We already know that a million and half people are going to lose their benefits don't we?

    GEITHNER: Again the most important thing we need people to understand is working with the Congress we're going to make sure we do enough to bring this economy back. But you know our job is not just to repair the damage done to this economy, bring growth back....
    emphasis added
    Geithner discussed several other subjects including the need to decrease the budget deficit.

    Saturday, August 01, 2009

    Real Declines in GDP

    by Calculated Risk on 8/01/2009 10:28:00 PM

    An update: the following graph shows the decline in real GDP (quarterly) from the previous peak since 1947. GDP is now 3.9% below the recent peak. In terms of declines in real GDP, the current recession is the worst since quarterly records have been kept (starting in 1947).

    Note: This includes the downward revisions to the previous quarters.

    When the red line is at zero it indicates that that quarter is at an all time high in terms of real GDP.

    It will be interesting to see how long it takes for real GDP to reach the pre-recession peak. With a a sluggish recovery, and assuming no more cliff diving, it could take until sometime in 2011.

    Real GDP Declines
    Click on graph for larger image in new window.

    Tiered House Prices for Several Cities

    by Calculated Risk on 8/01/2009 06:30:00 PM

    The big question of the week was: "Are house prices near the bottom?"

    My feeling has been that house prices are probably close to the bottom in the lower priced bubble areas with heavy foreclosure activity (Lawler's "de-stickification"). Inventories are very low in many of these areas, and activity has been fairly high as first time buyers and investors buy distressed properties.

    However it appears there are more foreclosures coming, and the level of inventory will be the key to future price declines.

    My view is that mid-to-high priced bubble areas - with far fewer distressed sales than the low-to-mid priced areas, and much higher inventory-to-sales levels, and few move-up buyers - will see continued real price declines, although the pace of price declines will probably slow.

    That still seems reasonable, and it depends on location. Here is a look as tiered house price indices from Case-Shiller to see if the lower priced areas have fallen further than the high priced areas.

    All graphs use the seasonally adjusted indices and nominal prices (not inflation adjusted).

    Tier House Prices PhoenixClick on graph for larger image in new window.

    The first graph is for Phoenix. The low priced tier has fallen the furthest, but the high tier price range isn't very high - and is impacted by the mix of houses sold.

    Note the price range of the tiers changes by city.


    The second graph is for Miami.

    Here is appears that all tiers are now at about the same level.
    Miami D.C. Tier House prices

    Los Angeles Tier House prices
    The third graph is for Los Angeles. Once again the low end area has fallen the furthest, however the high tier starts pretty low for Los Angeles because of the mix of homes that are selling. So this might be misleading for the mid-to-high end.


    This graph is for Washington, D.C.
    Washington D.C. Tier House prices

    Boston Tier House prices
    This graph is for Boston. The pattern is slightly different - the low end is still above the mid and high tiers.


    Next up is San Diego.

    Although the low end tier has fallen the furthest, the high end tier pricing is pretty low for San Diego because of the mix.
    San Diego Tier House prices

    San Francisco Tier House prices
    The last graph is for San Francisco and show the the low end has increased more than the mid-to-high tiers, and has also fallen further.

    This was an interesting exercise (at least for me!), but I'm not completely comfortable with the tiered pricing because the buckets are impacted by the mix of homes sold.

    Unemployment: 1.5 Million Workers will Exhaust Extended Benefits by end of 2009

    by Calculated Risk on 8/01/2009 03:35:00 PM

    From the NY Times: Prolonged Aid to Unemployed Is Running Out

    Over the coming months, as many as 1.5 million jobless Americans will exhaust their unemployment insurance benefits, ending what for some has been a last bulwark against foreclosures and destitution.

    ... laid-off workers in nearly half the states can collect benefits for up to 79 weeks, the longest period since the unemployment insurance program was created in the 1930s. But unemployment in this recession has proved to be especially tenacious, and a wave of job-seekers is using up even this prolonged aid.

    Tens of thousands of workers have already used up their benefits, and the numbers are expected to soar in the months to come, reaching half a million by the end of September and 1.5 million by the end of the year, according to new projections by the National Employment Law Project, a private research group.
    The National Employment Law Project report breaks down the extended benefit programs by state. The programs are triggered by the state unemployment rate. About half the states qualify for 53 weeks on top of the regular 26 weeks for unemployment benefits. Other states qualify for 46, 33 and 20 weeks of extended benefits.

    From the report:
    There are now an all-time high of 4.4 million Americans who have been out of work for more than six months, up dramatically from 2.6 million in February. That translates into 29% of jobless workers who have been out of work for six months, a record since data were first reported in 1948.
    Here is a graph I posted earlier this week of the number of workers who have exhausted their regular benefits:

    Unemployed Over 26 Weeks Click on graph for larger image in new window.

    The blue line is the number of workers unemployed for 27 weeks or more. The red line is the same data as a percent of the civilian workforce.

    According to the BLS, there are almost 4.4 million workers who have been unemployed for more than 26 weeks (and still want a job). This is 2.8% of the civilian workforce.

    Right now very few workers have exhausted their unemployment benefits, but there is tidal wave coming. The Law Project estimates 0.5 million workers will have exhausted their extended benefits by the end of September, and close to 1.5 million by the end of 2009. Unless the unemployment rate starts to decline, the numbers will continue to grow rapidly in 2010.

    CRE Report: U.S. Postal Service Might Consolidate up to 14 million Square Feet

    by Calculated Risk on 8/01/2009 01:18:00 PM

    From Costar: Post Office Looking at Consolidation of 3,243 of its 4,851 Largest Branches and Stations (ht John)

    The Postal Service sent a notice to American Postal Workers Union executives this summer that it was considering consolidation options in every major metro market in the country and would consider closing 3,243 of its 4,851 largest branches and centers in the review process. ... The review process was to last most of the summer ... but they want the consolidation to occur by October 2010.
    ...
    According to USPS records, it owns 8,546 facilities totaling 219.6 million square feet and leases another 25,272 locations totaling 912.2 million square feet. ...

    [T]he USPS could be studying the consolidation of more than 14 million square feet of retail/office/industrial space across the country. To put that in perspective, 14 million square feet would be the equivalent of about all of the vacant retail space in a market such as Boston or Cleveland or Denver or the Inland Empire or Tampa.
    ...
    In May, the U.S. Government Accountability Office (GAO) issued a report en titled "U.S. Postal Service - Network Rightsizing Needed to Help Keep USPS Financially Viable." The GAO study criticized the USPS for failing to take the necessary steps to remain viable, such as "rightsizing its retail and mail processing networks by consolidating operations and closing unnecessary facilities," and "reducing the size of its workforce."
    Here is the GAO report:
    Network rightsizing by consolidating operations and closing unnecessary facilities is likely to be only one of many steps that USPS will need to take to remain financially viable in the long run. ... We recognize that USPS faces formidable resistance to closing and consolidating facilities because of concerns about the effects of such actions on service, employees, and local communities.
    U.S. Postal Service Click on chart for larger image in new window.

    The postal service has already reduced their footprint a little since 2003 as shown in the chart from the GAO.

    But the GAO report suggests the next reductions may be much more significant. How about another 14 million square feet of vacant retail space on the market?

    FDIC Bank Failure Update

    by Calculated Risk on 8/01/2009 08:00:00 AM

    The FDIC closed five more banks on Friday, and that brings the total FDIC bank failures to 69 in 2009. The following graph shows bank failures by week in 2009.

    FDIC Bank Failures Click on graph for larger image in new window.

    Note: Week 1 on graph ends Jan 9th.

    The pace has really picked up recently, with the FDIC seizing almost 5 banks per week in July, and with 5 months to go, it seems 125 to 150 bank failures this year is likely.

    The current pace suggests there will be more failures in 2009 than in the early years of the S&L crisis. From 1982 thorough 1984 there were about 100 failures per year, and then the number of failures really increased as the 2nd graph shows.

    FDIC Bank Failures There were 28 weeks during the S&L crisis when regulators closed 10 or more banks, and the peak was April 20, 1989 with 60 bank closures (there were 7 separate weeks with more than 30 closures in the late '80s and early '90s).

    The 2nd graph covers the entire FDIC period (annually since 1934).

    For a graph that includes the 1920s and early '30s (before the FDIC was enacted) see the 3rd graph here.

    Of course the number of banks isn't the only measure. Many banks today have more branches, and far more assets and deposits.

    With Colonial (about $25.5 billion in assets), Guaranty (Texas, with close to $15.4 billion in assets) and Corus ($7.7 billion) all on the ropes, the dollars could really add up later this year. Corus and Guaranty will probably be seized in the next few weeks.

    The FDIC era source data is here - including by assets (in most cases) - under Failures and Assistance Transactions

    The pre-FDIC data is here.